Streaming Revenue Will Overtake Pay TV in Q3 of 2024
by Frankie Karrer
2 Min Read
6 Min Read
Before the rise of streaming services, television ads were the pinnacle of advertising. They allowed companies to reach a larger audience than radio or print promotions, and advertisers could target their efforts by carefully selecting the channels, shows, and time slots for their ads.
Although an overwhelming majority of U.S. households still own at least one television, the number of traditional cable TV and satellite TV subscribers has dropped significantly. Many households instead use their televisions and mobile devices to stream shows on demand.
Given this changing landscape, it’s important for marketing professionals to understand the differences and similarities between MVPD, vMPVD, and other video advertising channels.
MVPD is an acronym that stands for Multichannel Video Programming Distributor. MVPDs are service providers that deliver multiple television channels to their customers or subscribers. Although cable and satellite TV companies may be the first examples that come to mind, MVPDs can take many forms.
Companies that operate under an MVPD model bundle channels together and sell them to customers as a package. Traditionally, MVPDs might offer several package options at different price points but give customers little (if any) room to customize their packages.
The most well-known MVPD providers in the U.S. include the following:
Over the last decade, several telecommunications companies have merged, rebranded, or expanded their offerings. For instance, AT&T acquired DirecTV in July 2015, and Atlantic Broadband rebranded itself as Breezeline in January 2022. Meanwhile, CenturyLink expanded and reorganized its offerings when it became Lumen Technologies in September 2020.
Let’s cover some of the pros and cons of MVPD.
MVPDs offer speed and simplicity to their customers. When you sign up for a cable or satellite TV service, you get access to a wide range of channels with a single monthly bill. These services are familiar to most customers and can typically be bundled with home phone and internet services. Most providers even include a feature that allows you to record your favorite shows if you can’t catch them live.
As more and more content becomes available online, the drawbacks of the traditional MVPD model have become increasingly apparent. Though customers can choose from multiple channel packages, they nearly always pay for at least a few channels they never watch.
MVPD programming also requires specific equipment, which limits where you can watch. Because of these drawbacks, traditional television advertising is not as effective as it once was. Advertisers can still reach a large and relatively targeted audience with a well-placed TV ad. However, many Americans have “cut the cord” in recent years, ditching their cable or satellite TV subscriptions in favor of streaming services—particularly those that offer a vMVPD component.
In fact, eMarketer estimates that less than half of U.S. households will have a traditional MVPD subscription by 2024.
vMVPD is an acronym that stands for Virtual Multichannel Video Programming Distributor. The key difference between MVPD and vMVPD services is that the latter delivers content via online streaming rather than cable, fiber, or satellite technology. In addition to scheduled, linear TV content from the same channels as MVPD services, vMVPD providers typically offer video-on-demand (VOD) content.
Popular vMVPD providers include the following:
Many MVPD providers now offer vMVPD and VOD services as well. For instance, AT&T offers both DirecTV and DirecTV Stream, with the latter giving customers the ability to watch their favorite channels live and view on-demand content via mobile devices.
Here are some pros and cons of vMVPD.
vMVPD generally offers more benefits and fewer downsides than a traditional MVPD service. Customers still get access to multiple channels from a single source, but it’s typically cheaper and with more customization options.
With vMVPD, you can watch live TV from anywhere with an internet connection. Most vMVPD providers also stream on-demand content, and some allow you to download some shows for offline viewing. To attract customers who favor cord-cutting to save money, vMVPD providers may offer “skinny bundles” with fewer channels and a lower price than MVPD plans.
vMVPD also gives advertisers a better reach as traditional cable and satellite TV subscriptions continue to decline. Because many vMVPD services also offer VOD content, advertisers can choose from more ad delivery options. vMVPD advertising also generally enables more insight and better ad targeting.
vMVPDs require a high-speed internet connection, which could be a drawback if you don’t already pay for home internet.
However, if you sign up for a vMVPD package from the company that provides your WiFi, cell phone, or home phone service, you may qualify for a bundling discount. Otherwise, vMVPDs can actually save you money by removing the need for special equipment and the accompanying fees.
Most discussions of vMVPD also mention Connected TV (CTV) and Over-the-Top (OTT).
You might hear CTV used exclusively to refer to the devices themselves. Some narrow the definition further to include only TVs that access digital content — excluding mobile devices, computers, or other streaming devices. Some advertising experts use OTT to refer to the content itself and CTV for the devices used to stream it, while others use the terms interchangeably.
Regardless, CTV and OTT generally describe streaming services that provide on-demand content as opposed to linear TV. These services typically have apps for smart TVs, devices that connect regular TVs to the internet, and mobile devices. Examples include:
Connected TV and OTT content provides advertisers with an unparalleled opportunity to reach the right people at the right time with the right message. OTT and CTV ads are typically non-skippable, unlike their MVPD and vMVPD counterparts. They are often shorter and can be played at the beginning of content to be less intrusive.
Performance TV takes traditional TV advertising to the next level by combining the dynamic medium of video ads with the detailed targeting and metrics-tracking of digital advertising. Once your audience has seen your Performance TV ad, MNTN can help you retarget them with ads on their mobile devices and laptops. You can track metrics like return on ad spend, performance by creative, performance by geo, cost per site visit, and more along the way to help you further refine your targeting.
Remember: The more targeted your ads are, the more organic and useful they will feel to viewers. This can spark more demand generation than a heavy-handed sales pitch. With Performance TV, you can reach your ideal audience with ads tailored specifically to their needs, pain points, values, and interests.
MVPD isn’t entirely obsolete, especially for older audiences. However, as more consumers ditch their cable or satellite TV in favor of streaming services, advertisers may find more success advertising through vMVPD, CTV, and OTT.
Realize the full potential of CTV advertising with MNTN’s robust Performance TV marketing.
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